HARVEST GOOD DEVELOPMENT LTD v. SECRETARY FOR JUSTICE AND OTHERS

HCAL 32/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 32 OF 2006

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J U D G M E N T

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Introduction

1. In March of this year, I gave leave to the applicant to apply for judicial review, challenging a decision of the 1^st respondent, the Secretary for Justice.  The 2^nd and 3^rd respondents, as directly affected persons – at least, as the applicant saw it – were joined as parties to the application.

2. The 2^nd and 3^rd respondents have now applied, by way of an interlocutory application, to have all claims against them struck out; that is, all claims which may, directly or indirectly, make them liable for any loss of property or monetary loss.  With those claims struck out, the respondents seek, naturally enough, to be disjoined as parties to the proceedings.

3. The respondents’ application is founded on a number of submissions all of which arise out of the same factual context.  That factual context will have to be considered in greater detail later in this judgment.  At this juncture, however, it suffices to describe it briefly in the following terms.  In the year 2000, the respondents instituted action against the applicant on the basis that, having been in adverse possession of certain land for a period of time then required by the Limitation Ordinance, Cap.347, they were entitled to declarations which barred the applicant’s paper title to that land, leaving them, without payment of any compensation, to enjoy rights of possession.  That ‘first action’, as I shall call it, was determined by a judgment of the Court of Final Appeal given on 5 January 2006.  In terms of that judgment, the respondents were given the declarations they sought without any requirement imposed upon them to pay compensation to the applicant.

4. Arising out of this factual context, the respondents’ application has been founded on a number of submissions which may briefly be described as follows :

(i) The present application for judicial review, while it is not between the exact same parties and does not, in its narrow sense, deal with the exact same issues, nevertheless attempts to re-litigate the first action.  By raising the assertion that loss of title without compensation offends the Basic Law, it attempts to raise a defence which was open to it in the first action and which it chose not to raise.  That being the case, on the wider application of the principle of res judicata, it amounts to an abuse of process for the applicant now to attempt to litigate an issue which properly belonged to the first action and which the applicant should have brought forward at the time.

(ii) Having regard to the history of the litigation between the parties, it must be the applicant’s intent to employ this new judicial process to harass the respondents.  Accordingly, in respect of the respondents, this application for judicial review amounts to vexatious litigation.

(iii) In respect of the 2^nd and 3^rd respondents, in obtaining leave to apply for judicial review, the applicant failed to make full disclosure so that the court was in a position to determine the question of leave in possession of all relevant facts.  Leave should therefore be set aside on the grounds of non-disclosure.

(iv) It was determined in the first action that the respondents had exercised adverse possession between early 1962 and 1982.  The Basic Law, which came into effect in 1997, does not reach back so as to nullify the rights of the respondents acquired in private law at that time or to require now that some form of compensation must be paid by them.  Whether, since the coming into effect of the Basic Law, the relevant provisions of the Limitation Ordinance have been in conflict with that Law is not an issue capable of affecting the rights of the respondents acquired in or about 1982.

(v) There is no principle of law, applicable in the present case, in terms of which private persons, such as the respondents, can be pursued, together with and/or in addition to Government, for public law compensation.

A more in-depth view of the history

5. The applicant has at all material times been the registered leasehold owner of some 5 lots of agricultural land situated in the New Territories in the hills near Tai Po.  The applicant, I am told, is one company in a large group of companies known as the Henderson Group.  The Henderson Group has extensive interests in property acquisition and development.

6. The present saga began in 1993 when the predecessor in title to the land, Mr Lee Shau Kee, instituted action by writ claiming possession of the land on the basis that the occupiers were trespassers.  This action was instituted on the strength of the decision in a case called Chung Ping Kwan v. Lam Island Co. Ltd [1994] 1 HKC 613.  However, when that decision was reversed in the Privy Council in 1996, the action was discontinued.

7. As I have said earlier, in the year 2000 the 2^nd and 3^rd respondents, who are mother and daughter, then instituted legal proceedings against the applicant, now the registered leaseholder.  The respondents claimed that, as squatters, they and their family had been in adverse possession of the land over which the applicant had paper title for more than 20 years and, as such, were entitled to declarations barring the applicant’s effective title to the land.  The declarations sought by the respondents were, first, a declaration under s.7(2) of the Limitation Ordinance barring the applicant from taking any action to recover the land and, second, a declaration under s.17 of the Ordinance extinguishing the applicant’s title, as leaseholder, in the land.

8. As I understood it, the applicant defended this ‘first action’, as I have described it, on two factual bases; first, that the respondents had not possessed the land by way of adverse possession but had occupied it as licensees and, second, that in any event there had been an abandonment of the land or part of it.  In addition, the applicant counterclaimed for vacant possession.

9. In his judgment handed down in February 2004, the judge at first instance held that there had been adverse possession from at least early 1962 until 1982 and that the respondents remained in possession of the land.  He therefore granted the declarations sought, dismissing the applicant’s counterclaim for vacant possession.

10. In the result, as the law then stood, although the applicant, as leaseholder, remained liable to the Government in respect of the covenants contained in the lease, it was now barred for the duration of its leasehold interest in the land from bringing proceedings in order to seek possession of it.  In addition, its title – as against the respondents only – was extinguished.  The respondents, however, were entitled to enjoy possession of the land without payment of any form of compensation, the law making no provision for such payment.

11. The applicant appealed and did so successfully.  Although the Court of Appeal did not in any way disturb the findings of fact made by the judge at first instance, accepting therefore that there had been adverse possession for a period of 20 years, it held that it was bound by an earlier judgment it had made which defeated the respondents’ claim.  In that earlier judgment, the Court of Appeal had held that legislation which had been introduced in 1988; namely, the New Territories Leases (Extension) Ordinance, Cap.150, created a new estate in respect of leased land in the New Territories so that, for the purposes of the limitation of actions, time would begin to run again from the creation of the new estate.

12. The respondents appealed to the Court of Final Appeal.  Their appeal was heard together with other appeals, the common denominator being the issue of whether the New Territories Leases (Extension) Ordinance merely extended leases of land in the New Territories, creating no new estate, or whether it acted, as the Court of Appeal had found, to create a new estate.

13. It should be noted that the issue of whether the New Territories Leases (Extension) Ordinance in any way determined the applicant’s claim had not been raised at first instance.  It was an issue first raised in the Court of Appeal.

14. In its judgment of 5 January 2006, the Court of Final Appeal held that the New Territories Leases (Extension) Ordinance did not create new estates but merely extended the terms of existing estates.  It followed that the applicant’s title as leaseholder had not been dissolved and re-created but remained the same and, as such, remained subject to the same bar created by the respondents’ adverse possession.  In the result, the Court of Final Appeal restored the declarations granted by the judge at first instance. 

15. Before leaving the judgments of the Court of Appeal and the Court of Final Appeal, it must be mentioned that the issue of at least the perceived unfairness of land being acquired by squatters without payment of compensation was not an issue totally ignored by those courts even if it was not a litigated issue.  In his judgment, Lord Hoffmann, referring to the majority judgment of the Court of Appeal, said that he detected in the reasoning of the majority —

“… some antipathy to the proposition that a squatter can, simply by wrongful occupation for a period which has now been reduced to 12 years, in effect, if not in legal theory, acquire a valuable property and leave the registered owner with the sole privilege of paying the rent.”

16. Lord Hoffmann went on to observe that there was much to be said for this point of view, it being a view shared by Parliament in the United Kingdom when it passed the Land Registration Act 2002.

17. In respect of that statute passed in the United Kingdom, Hong Kong not following suit, Lord Hope, in his speech in the judgment of the House of Lords in JA Pye (Oxford) Ltd v. Graham (2003) 1 AC 419, at 446, observed that the United Kingdom statute had brought in a more rigorous regime than had been in place before.  The effect of the new legislation, he said, would —

“… make it much harder for a squatter who is in possession of registered land to obtain a title to it against the wishes of the proprietor.  The unfairness in the old regime which this case has demonstrated lies not in the absence of compensation, although that is an important factor, but in the lack of safeguards against oversight or inadvertence on the part of the registered proprietor.”

18. In its judgment in JA Pye (Oxford) Ltd v. Graham, the House of Lords found, on the factual evidence, that the registered owners of the land in dispute, it being certain grazing land, had, by reason of adverse possession, lost possessory title to that land.  The registered owners then took the matter to the European Court of Human Rights.

19. In a judgment handed down on 15 November 2005, that court held that to deprive the registered owners of their title to the land without any form of compensation offended art.1 of the First Protocol to the Convention for the Protection of Human Rights and Fundamental Freedoms.  That article is to the following effect :

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions.  No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

20. The European Court concluded that the loss of possessory title upset the fair balance between the demands of public interest on the one hand and the right of the registered owners to the peaceful enjoyment of their land on the other.

21. The European Court attempted to determine the question of a fair compensation, if any.  But the matter was held over for the gathering of further evidence.

22. The judgment of the European Court – profound in its consequences – was handed down just two weeks before the respondents in these present proceedings commenced their successful appeal to the Court of Final Appeal.  Accordingly, the judgment of the European Court, together with the various national judgments which had preceded it, would have been available to all parties involved in the Hong Kong litigation before the commencement of the appeal to the Court of Final Appeal.

23. Although arts.6 and 105 of the Basic Law are not on all fours with art.1 of the First Protocol, nevertheless they do act in a cogent fashion to protect property rights.  The two articles are to the following effect :

“art.6

The Hong Kong Special Administrative Region shall protect the right of private ownership of property in accordance with law.

art.105

The Hong Kong Special Administrative Region shall, in accordance with law, protect the right of individuals and legal persons to the acquisition, use, disposal and inheritance of property and their right to compensation for lawful deprivation of their property.

Such compensation shall correspond to the real value of the property concerned at the time and shall be freely convertible and paid without undue delay.”

24. As to their application in the context of the Limitation Ordinance, it is pertinent to note that, in a judgment handed down on 8 September 2006 in this court, Deputy Judge Saunders (as he then was) came to the conclusion – albeit obiter – that s.7(2) of the Limitation Ordinance is inconsistent with art.105 of the Basic Law : see The Hong Kong Buddhist Association v. Cheng Ka Leung, Michael and certain unknown occupiers (unreported) HCMP4108/2003.

25. At no stage of the litigation in the first action between the respondents and the applicant was the ‘Basic Law point’ raised by the applicant.  However, on 5 January 2006 – the day of the judgment given by the Court of Final Appeal – the applicant instituted an action by writ (HCA20/2006) in which it sought a declaration that ss.7 and 17 of the Limitation Ordinance offended the Basic Law and a further declaration to the effect that, if the respondents were entitled to remain in possession of the land, they must pay compensation.  A lis pendens was registered.  This action, however, was discontinued in March 2006.

The institution of the present judicial review proceedings

26. Some six to seven weeks after the Court of Final Appeal had given its judgment in the first action, solicitors representing the applicant wrote to the Secretary for Justice.  In that letter, dated 25 February 2006, the solicitors asserted that the interpretation by the Court of Final Appeal of the New Territories Leases (Extension) Ordinance, when read together with ss.7(2) and 17 of the Limitation Ordinance, resulted in an arbitrary deprivation of the applicant’s property; arbitrary in the sense that it was without compensation, and that ss.7(2) and 17 therefore offended arts.6 and 105 of the Basic Law.

27. In support of this assertion, the solicitors incorporated into their letter the decision of the European Court to which I have earlier made reference, that decision being JA Pye (Oxford) Ltd v. United Kingdom (2005) 19 BHRC 705.  In this regard, the solicitors wrote :

“The Court observed that the taking of property in the public interest without payment of compensation reasonably related to its value could only be justified in the most exceptional circumstances, and that this principle applied with equal rigour to the compulsory transfer of property from one individual to another.  In light of the lack of compensation for the taking of private property as well as the lack of adequate procedural protection for the right of property within the legal system at the material time, the European Court found a violation of Art 1 [of the First Protocol].”

28. The solicitors continued by saying :

“[The respondents] would not have been able to acquire any title to the said [land] by virtue of their possession of the same but for the legislative provisions in the Limitation Ordinance.  Our client is deprived of its property right – without any compensation – simply because the [land] was occupied for a period of 20 years or more.  As held by the European Court, no fair and sensible purpose is served by this rule.  There is no requirement that our client, as the registered owner of the land, has to be notified before the deprivation takes effect, as it is the case of the Land Registration Act 2002 in the United Kingdom now.  Nor is there any provision for compensation for the deprivation of property in the Limitation Ordinance or elsewhere.”

29. In light of these assertions, the solicitors for the applicant made the following request of the Secretary for Justice :

“We are instructed by our client, which we hereby do, to demand your goodself to take steps to repeal sections 7(2) and 17 of the Limitation Ordinance or otherwise to bring them in line with Articles 6 and 105 of the Basic Law and to reinstate the property right of our client to the said [land], or to provide our client with adequate compensation for the deprivation of its property right to the said [land].  The amount of compensation, which shall correspond to the real value of the said [land], could be assessed in due course.”

30. The solicitors also wrote to the legal representatives of the respondents.  This letter was to the same effect, concluding, however, with a different demand :

“We are instructed by our Client, which we hereby do, to demand your Clients to restore the property right of our Client to the said [land], or to provide our Client with adequate compensation for the deprivation of its property right to the said [land].  The amount of compensation, which shall correspond to the real value of the said [land], could be assessed in due course.”

31. It does not appear that either the Secretary for Justice or the legal representatives of the respondents made any response.  In a letter dated 7 March 2006 addressed to the Secretary for Justice, the solicitors for the applicant said that they would take the lack of response to mean that the Secretary was not prepared to undertake the requested measures.

32. The decision made the subject of the applicant’s application for judicial review is the decision by the Secretary for Justice, made on or about 7 March 2006, by omission or otherwise, to refuse the demand made to bring ss.7(2) and 17 of the Limitation Ordinance in line with the Basic Law and, in so doing, either to reinstate the effective property rights of the applicant or alternatively to provide adequate compensation for the loss of those rights.

33. The relief sought by the applicant is to the following effect :

“1. A declaration that s.7(2) and s.17 of the Limitation Ordinance are inconsistent with art.6 and art.105 of the Basic Law and are therefore of no effect;

2. An order that the 1^st respondent [the Secretary for Justice] do take steps to reinstate the property right of the applicant in relation to the said [land] as defined hereinbelow;

3. Alternative to paragraph 1 and paragraph 2 above, a declaration that the 1^st respondent must compensate the applicant for the loss of its property right in relation to the said [land], the amount of which compensation shall correspond to the real value of the said [land] at the time of their deprivation.

4. Alternative to paragraph 3 above, a declaration that the 2^nd and 3^rd respondents must compensate the applicant for the loss of its property right in relation to the said [land], the amount of which compensation shall correspond to the real value of the said [land] at the time of their deprivation.”

34. Manifestly, on the basis of the relief sought, the 2^nd and 3^rd respondents had to be made parties to the application.  They are in every sense directly affected.  If the relief sought is granted, they run a risk of being deprived of their possession of the land or of being made to pay compensation for their right of possession.  As the application has been drawn, therefore, they are integral to it.  In the body of the notice of application, this is put beyond doubt, para.21 making the following assertion :

“The 2^nd and 3^rd respondents are joined as persons directly affected by this application pursuant to Order 53 r 5(3) and r 9 and Order 15 r 6(2).  They would not have acquired any lawful title to the said [land] by virtue of ss.7(2) and 17 of the Limitation Ordinance if these two provisions are in contravention of the Basic Law.  Upon declaring ss.7(2) and 17 of the Limitation Ordinance to be inconsistent with the Basic Law, the court has an inherent jurisdiction to grant damages or make any other appropriate orders that may adversely affect the 2^nd and 3^rd respondents.”

35. By reason of the institution of this new action in respect of the land, a lis pendens remained in place.

The submission of ‘re-litigation’

36. In my judgment, the respondents’ application may be determined on their first ground of submission; the issue of res judicata or, more accurately, I think the issue of whether the judicial review proceedings against them amount to an abuse of process by way of re-litigation.

37. In the common law, it is fundamental that there must be finality in litigation.  A principle that emerges is that, when a matter becomes the subject of adjudication, the court requires the parties to put forward their whole case and will not, except under special circumstances, permit the parties to later re-open matters that should have been brought forward as part of the original litigation.  In this regard, the starting point is perhaps the dictum of Wigram V-C in Henderson v. Henderson (1843) 3 Hare 100 at 115 :

“… where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case.”

The dictum continues to the following effect :

“The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.”

38. In the Hong Kong case of Yat Tung Investment Co. Ltd v. Dao Heng Bank Ltd [1975] AC 581, Lord Kilbrandon, delivering the opinion of the Privy Council, endorsed this ‘wider’ interpretation of the plea of res judicata.  In so doing, he cited with approval the observations of Somervell LJ in Greenlalgh v. Mallard [1947] 2 All ER 255, at 257 to the following effect :

“… res judicata for this purpose is not confined to the issues which the court is actually asked to decide, but … covers issues or facts which are so clearly part of the subject matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started in respect of them.”

39. Whatever the true basis for shutting out litigation on this wider interpretation of res judicata, as Somervell LJ noted, for all practical purposes, it is an application of the doctrine of abuse of process.  In Barrow v. Bankside Members Agency Ltd [1996] 1 ALL ER 981 at 983, Bingham MR put the issue firmly in context when he said :

“It is a rule of public policy based on the desirability, in the general interest as well as that of the parties themselves, that litigation should not drag on for ever and that a defendant should not be oppressed by successive suits when one would do.  That is the abuse at which the rule is directed.”

40. In the present case, I think, the issue I must determine may be fairly simply stated.  It is whether the respondents are correct to say that the applicant’s Basic Law point was an issue available for litigation in the first action, an issue that, for whatever reason, the applicant chose not to bring forward, and whether, in the result, it is now to be regarded as res judicata in the sense that it would amount to an abuse of process to have it litigated against the respondents in the present judicial review proceedings.

41. Two questions arise.  First, was it open to the applicant in the first action to raise the Basic Law point?  Second, if it was, what consequences should flow from the applicant’s failure to raise it in that action? 

42. In my judgment, the first action having been instituted by the respondents only in the year 2000, well after the coming into force of the Basic Law, it was as equally open to the applicant to bring forward the Basic Law point in that first action as it has been to bring it forward in the present judicial review proceedings.  No procedural bar in raising the Basic Law point as a defence, perhaps as a preliminary point for determination, in the first action has been argued and, for myself, I am aware of none.  As I see it, difficulties concerning retrospective application of the Basic Law would have applied equally in the first action as they do in the present proceedings and that issue, of course, has not deterred the applicant from instituting the present proceedings.  I am satisfied, therefore, that the Basic Law point was open to the applicant in the first action. 

43. This brings me to the second, more difficult question : what consequences should flow?  In determining this second question, the task of this court, as I see it, is to draw a balance between the claim of the applicant to be able to put its case before the court and the claim of the respondents not to be hounded; that is, unjustly oppressed, by having to endure yet more litigation when the first action covered a spectrum of legal issues and went all the way to the Court of Final Appeal.

44. In drawing the balance, I take into account, of course, that the onus is on the respondents to show that, in respect of themselves, further litigation would amount, in the particular circumstances of this case, to an abuse of process. 

45. By way of guidance only and speaking generally, it would, it seems to me, be unreasonable for a defendant not to plead a defence if, having regard to the nature of the claim against him, it would reasonably be expected that he would raise the defence and, by so doing, enable it to be determined in the one set of proceedings. 

46. It is true that JA Pye (Oxford) Ltd v. United Kingdom was only determined by the European Court very late in the litigation of the first action.  But the national litigation had earlier raised the issue of the effective seizure of land without compensation offending individual rights.  In any event, the issue of seizure of land without compensation was, for those learned in Hong Kong public law, one standing to be determined.  To put it another way, I do not see how it can be argued that in the early stages of the first action it was such an oblique point that only intervening jurisprudence has revealed its true substance.  The relevant terms of the Basic Law are not ambiguous and indeed, during the course of the first action, the general issue of the unfairness of squatters being able to obtain possessory title without compensation was raised in the Court of Appeal and the Court of Final Appeal.  What must also be remembered is that the applicant has at all times been enable to employ solicitors and counsel of high reputation.  In short, the Basic Law point was available at all times and not so far beyond the compass of the applicant’s counsel that the applicant can be excused for not identifying it earlier.

47. As it was, Mr Neoh, leading counsel for the applicant, did not appear to suggest that the Basic Law point had been overlooked in the first action.  That matter, to my memory, was not debated one way or the other. 

48. In the course of his submissions, Mr Neoh argued rather that the first action and the present judicial review proceedings have concerned very different issues.  The first action, he said, was concerned with whether the respondents had been in adverse possession; that is, whether, in fact and law, adverse possession could be demonstrated.  That issue, said Mr Neoh, was not being re-litigated in the present judicial review proceedings.  That issue has been finally determined.  The present action was concerned entirely with the consequences of the final determination of adverse possession.  Should the applicant now be stripped of possessory title without compensation?  In particular, as Mr Neoh expressed it, ‘what remedies are available, if any, for a deprivation of private property by way of adverse possession without compensation?’

49. I accept, of course, that there is a real difference between the issue of demonstrating adverse possession and the issue of what consequences should flow if that adverse possession is demonstrated.  But, in terms of litigation proceedings, it seems to me that little turns on the difference.  In adjudicating individual actions, our courts deal on a daily basis with those two issues, first, whether a claim is demonstrated and, second, if so, what consequences should flow from it.  Liability and quantum are the twins in our litigation firmament, separate but together, invariably dealt with in the one set of proceedings.  In respect of the first action, was there any persuasive reason why this invariable practice should not have been followed by the applicant?  I can identify none. 

50. In any event, it seems to me that the Basic Law point, if it had been raised in the first action, would, or could, have been a good defence both to the substantive claim of adverse possession and the claim that the consequences of adverse possession should be effective possessory title without compensation.  I say that because, if it had been shown that ss.7(2) and 17 of the Limitation Ordinance are inconsistent with the Basic Law (and there is respectable precedent for that argument), it seems to me that it could have been argued that the two sections could not stand as they are; in short, being inconsistent that they had to be struck down.  It would not have been for the courts in the first action to attempt to ‘make law’ by somehow amending the sections to include some provision, for example, for compensation.  That would be for the legislature.

51. The Basic Law point was therefore not only an important issue in the first action, integral to the issues in that action, but could have been determinative of it.  Indeed, if raised in the first action, even assuming the issue had gone all the way to the Court of Final Appeal, it would now have been finally determined.  That would have kept all the issues within the parameters of one case.  It may well have saved costs and, it seems, would certainly have saved much time.

52. Mr Neoh identified as another difficulty facing the applicant in bringing forward the Basic Law point in the first action the fact that the proper respondent for a constitutional challenge should be a member of the Government; in this case, the Secretary for Justice who, of course, was not a party to the first action.  As he put it, there would have been procedural difficulties in bringing in the Secretary for Justice on a public law claim in the first action which was a private law claim commenced by the respondents by way of writ.  To my understanding, however, there is no bar to a constitutional issue; that is, an issue under the Basic Law, being raised in private civil proceedings by a party – a private party – to those civil proceedings.

53. Mr Neoh argued that, towards the end of the litigation, matters had become complicated.  As he put it, it would not have been desirable to bring in the public law defence as that would have further complicated the appeal.  But the fact is that the Basic Law point was never raised in the first action.  The issues before the Court of First Instance were not that complex : a standard adverse possession claim defended on essentially factual bases.  Whether it would have been possible to raise the matter before the Court of Appeal is not now, in my view, determinative.  The fact is, as I have said, it was never raised at any stage of the proceedings even though I am satisfied that it could have been raised at first instance.  However, insofar as it may be necessary to consider the point, I do not think it is entirely fruitless to hazard that, the issue being one of importance, if raised before the Court of Appeal, some means may have been found to determine it.

54. Mr Neoh submitted that, if the issue of adverse possession itself had been determined in favour of the applicant before the Court of First Instance or the Court of Final Appeal, there would have been no basis for pursuing the constitutional claim which would therefore have been premature as well as a waste of legal costs.  I do not agree.  As I have said earlier, if brought forward in the first action, the Basic Law point would, or could, have determined all issues.  In any event, it is not open to a defendant to defend a matter on the basis that it will in the one action put forward one defence and, if that fails, it will, by whatever means available, open a new action putting forward a further defence.  Absent special circumstances, a defendant is not able to ‘drip feed’ his defences in this way.  It is an abuse of the system.

55. It was Mr Neoh’s general submission that, for all the reasons put forward by him, a separate public law action, after the private law issue of whether there had or had not been adverse possession had been settled, was both the proper and appropriate way of proceeding.  I regret I do not find that submission persuasive.

56. I do not suggest any bad faith on the part of the applicant.  But what must be taken into account is that there have been three actions in this matter before the institution of the judicial review proceedings.  It is true that two were aborted and I do not doubt that they were aborted in good time for entirely good reason.  But nevertheless prior to their discontinuance they still had to be contested.  Now the respondents, if I rule against them, must contest the judicial review proceedings.  They remain at risk, unable to enjoy the rights obtained in the first action without fetter.  In my judgment, viewed objectively, taking into account my reasoning set out above, it seems to me that the respondents have a good case for saying that it is simply wrong that the Basic Law point was not raised early in the first action and it is wrong therefore that they should have to bear the yoke of this new action for however long it may endure.

57. Mr Marshall SC, for the respondents, spoke of them being made the subject of ‘legal terrorism’.  He contrasted the unequal position of an aged woman and her daughter when set against the commercial power of the Henderson Group of companies.  For myself, I did not find such hyperbole of assistance.  The respondents fared well enough in the first action and Mr Marshall, who spoke for the respondents, is hardly fresh from his qualifying examinations.  No, in my view, the matter was to be determined on the basis of whether, no matter the public importance of the issue, it could, and should, have been litigated in the first action and whether the attempt to do so in the present proceedings amounts to an abuse.  In my judgment, the applicants have demonstrated that it would be an abuse.  On this single basis, I am satisfied that they are entitled to the relief they seek.

The submission of vexatious litigation

58. Viewed as a separate basis of challenge, I have found nothing of substantive merit in this submission.  On the evidence presented to me, I do not accept that the actions instituted against the respondents, or the defences raised to their claim, have been without any sufficient foundation and intended simply to harass them or wear them down.  As I have said earlier, I am satisfied that the applicant has acted in good faith.  Whether ss.7 and 17 of the Limitation Ordinance offend the Basic Law is, in my view, not only an important issue but most certainly prima facie arguable.

The submission of failure to make full disclosure

59. Again, I have found nothing of substantive merit in this submission.  While it may be that the applicant, in its notice of application for leave to apply for judicial review, should ideally have spelt out in fuller and plainer language the historical background as it concerns the respondents, I do not see that the succinct language used has misled the court.  The historical context was to be gleaned not only from the wording of the application itself but also from the judgment of the Court of Final Appeal which was exhibited to the application.  As to the bases upon which the respondents found themselves cited in that capacity, that was clearly enough set out in the notice of application : see para.34 of this judgment.

60. It is true that an exhaustive history of the litigation was not given.  For example, no mention was made of the action instituted in January 2006, that being the action that was discontinued within a matter of weeks.  But, as Mr Neoh said, the fact that the applicant had instituted the action in error and had then, as soon as the error was realised, discontinued the action, was not in any material way relevant to the judicial review proceedings.  By then it was history.  Mr Marshall, for the applicants, found that it was relevant to raise it and it has lent him some assistance.  But, in my view, it does not follow from that fact that its omission in the original judicial review makes the applicant guilty of material non-disclosure.

61. By way of general summary, it is a useful ‘litmus test’, I think, for me to say that, as the judge who granted leave, looking back now with the benefit of hindsight, I do not see that I was misled by any failure on the part of the applicant in its notice of application to divulge matters of material relevance.

The submission that the Basic Law has no retrospective effect

62. In my judgment, Mr Neoh was correct when he said that this is an issue for the substantive hearing, not an issue for an interlocutory application in which the 1^st respondent is absent.

63. Whether the Basic Law in any particular case will have retrospective effect remains a difficult issue.  No authority was put before me to show that it has been finally determined.  As Mr Neoh emphasised, there is nothing in the Basic Law to suggest that it does not apply to court proceedings which have been instituted, heard and determined after the Law come into effect even though the factual issues may pre-date it.  The first action, of course, was only instituted in the year 2000. 

64. In any event, it was Mr Neoh’s submission that art.105 of the Basic Law would only come into effect to protect the right to compensation for lawful deprivation once it was shown that such deprivation had taken place.  That deprivation, he argued, was only finally determined when the Court of Final Appeal handed down its judgment in January 2006.  No issue of retrospectivity therefore comes into play.

65. Whether Mr Neoh’s submissions are correct remains to be seen.  I am satisfied, however, that the issue is not one which falls to be determined at an interlocutory hearing when not all the parties are represented.  It is not simply a question of whether the Basic Law has retrospective effect, it is whether it has retrospective effect in this particular case and, importantly, the first action having only been instituted in 2000, whether retrospectivity is an issue at all.

The submission that public law compensation cannot be visited on the respondents

66. This again is not an easy issue.  However, there is authority to suggest that, in certain circumstances, if it is just and convenient to do so, relief may be granted not only against the public body whose decision is impugned but also against directly affected third parties.

67. Mr Neoh put it this way.  If in order to protect rights under the Basic Law, the only effective remedy is an award against a directly affected third party rather than the public body whose decision is impugned, then surely the judicial review process will encompass that, provided always, of course, it is just and convenient to do so.  This, it seems to me, is certainly prima facie arguable.

68. Again, however, as Mr Neoh has said, I consider it to be a matter for determination at the substantive hearing rather than determination at an interlocutory stage.  The issue is simply too interwoven into the fabric of the substantive application.

Conclusion

69. For the reasons given in the body of this judgment, I am satisfied that it would be an abuse of process to continue the litigation in these judicial review proceedings against the respondents.  Accordingly, on this single basis, the claims against them are struck out and they are disjoined as respondents.

70. There will be an order nisi awarding costs to the respondents, that order to be made final 21 days after the date of handing down this judgment provided there is no earlier application to argue the matter.